Oliver K. Robinson and Deborah L. Robinson, et al. - Page 4




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         basis of a fiscal year ending July 31, and Pak West used a fiscal            
         year ending September 30.                                                    
              During the years at issue, Career’s business was divided                
         into two major segments:  (1) Providing air freight, air charter             
         and aircraft leasing services; and (2) purchasing and selling                
         used aircraft and parts.  Pak West came into existence in late               
         1992 as an air carrier providing air cargo services.                         
              For its fiscal year ending July 31, 1992, Career timely                 
         filed its Form 1120, U.S. Corporation Income Tax Return, on                  
         October 15, 1992.  The Robinsons also filed a timely Form 1040,              
         U.S. Individual Income Tax Return, for their 1992 calendar year              
         during March 1993.                                                           
              Sometime during 1995, the Robinsons’ 1992 and 1993 returns              
         were selected for audit.  Subsequently, the audit was expanded to            
         include Career and Pak West.  During the audit the Robinsons                 
         executed Forms 872, Consent to Extend the Time to Assess Tax,                
         consenting to the extension of the assessment period for their               
         1992 individual return until December 31, 1997.  No consents to              
         extend were executed for Career with respect to its fiscal year              
         ended July 31, 1992, and the period for assessment for that year             
         expired on October 15, 1995.                                                 
              Respondent did not issue a notice of deficiency with respect            
         to Career’s 1992 fiscal year and, accordingly, Career’s                      
         questionable items of expense were not disallowed.  On December              







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